I sent the following letter to members of Provo's Municipal Council on June 2, 2008.
Greetings Members of the Council;
I apologize for the last-minute nature of this communication. I've been waiting to collect as much information as possible before I e-mail you important information on why Broadweave is the wrong company to sell iProvo to.
Certainly basic honesty seems to be an issue with Broadweave. As of May 15, they have neglected to obtain business licenses in any municipality where they do business. Washington City has considered referring the matter to enforcement. (See: http://www.freeutopia.org/2008/05/15/broadweave-lacks-proper-business-licenses-corporation-filings/) They also have repeatedly misrepresented their company's age, claiming to have existed since 1999, yet nothing shows that the company existed prior to 2003. In an interview today, Steve Christensen, Broadweave's CEO, is now claiming the company has been around since 2003. Why the lie? (See: http://www.freeutopia.org/2008/05/16/broadweave-did-not-exist-prior-to-2003-website-claims-first-contract-in-1999/
and http://www.freeutopia.org/2008/06/02/broadweave-doubletalks-iprovo-on-couchcast/) They have also talked up the importance of equipment ownership and the poor value of open networks while failing to practice what they preach. (See: http://www.freeutopia.org/2008/05/19/broadweaves-double-talk-on-open-networks/ and http://www.freeutopia.org/2008/05/20/broadweaves-double-talk-on-equipment-ownership/) It is even rumored that they have tax liens filed against them by the state for failure to pay their withholding taxes for November and December of 2007. (See: http://www.freeutopia.org/2008/05/16/evaluating-the-iprovo-asset-purchase-agreement/#comment-4887) Can you really trust a company that shows so many signs of being untrustworthy?
This says nothing of their expansion plans either. The Eagle Broadband network they have purchased in Houston was a seriously distressed asset. In order to make it usable, they need to build a NOC, negotiation franchise agreements and transport rights and replace some vital missing equipment. They also need to overcome a negative consumer perception. At the time that OEN, the previous network operator, went out of business, there were 1500 customers, all of whom lost their service with zero notice. That kind of poor experience means they will be plowing millions upon millions into a network with a strongly negative customer perception. This says nothing of their attempt to pursue developments in Nevada, Arizona, New Mexico and California, pursuits that will require even more money that they do not have.
So what of their technical experience? While Veracity brings in a lot of smart guys, Broadweave itself has zero experience delivering video in Traverse Mountain and has fewer than 30 video customers in Sienna Hills, a subdivision sitting in one of the areas hardest-hit by the subprime mortgage meltdown. Integrating the Veracity team, one that offers very limited video experience, will take months and result in major system hiccups. They will also have to attempt to integrate city employees from the NOC, many of whom are highly opposed to the transaction and have negative opinions of their soon-to-be co-workers. Replacing these highly-skilled employees will be very expensive and have a strong negative impact on network operations, especially in Utah's tight labor market.
The option you are presented with is a terrible one, to spend 19 years financing the operations of a dishonest company with big dreams and small execution that plans to acquire a basket full of technical and HR problems. I urge you in the strongest possible terms to reject this rent-to-own arrangement and find some other way to resolve the problems behind iProvo.
If you have any additional questions, I would be more than happy to answer them and would request that this letter be entered in as part of the public record on behalf of proponents of open municipal fiber optic networks.
Very well written. Let’s hope they get it and use it to it’s fullest.
The council just approved the sale of iProvo to BroadWeave 4-3.
Opposed to the deal were:
Sherrie Hall Everett: She felt the vote was premature and she hasn’t been pushed past the tipping point of supporting the deal yet.
Steve Turley: He is in favor of getting rid of iProvo, but was opposed to the process that was used.
Cynthia J. Clark: She wants to get rid of iProvo, but didn’t get good vibes from BroadWeave.
Whether the sale is a good idea or not will soon be seen. The fact is that Provo City got into something that they shouldn’t have attempted. I am a Provo resident, I think the sale was a smart move. The process may not have been the popular one, they did what they felt was needed to keep from wasting more taxpayers money.
I work in telecom, the logistics of the whole deal is astounding. If Broadweave can pull it off great, if not, it could possibly destroy not only Broadweave, but Veracity, who decided to merge with them. It will be interesting to see how this plays out in the months to come.
@Skippy: How convenient … You work in telecom and you live in Provo, and you’re sympathetic to Broadweave/the Telcos. Your opinion is very biased.
The whole deal reeks of backroom deals. iProvo is public property, and as such it should be auctioned off to the highest bidder. The real value of the network is very high because of the municipal owned monopoly that cut through tons and tons and tons of red tape when it was built.
Burn in hell Nuvont.
Burn in hell Veracity.
Burn in hell Broadweave (and Sorenson, screw you too [Sorenson is the organization giving Broadweave the capital it needs to pull off this little stint]).
Astroturfer Alert: I thought Skippy was expressing skepticism that Broadweave can pull this thing off.
Jesse: Perhaps I was a little harsh. However, I still think the shady manner in which the city has gone about selling iProvo (backroom deals, rather than a public auction) is messed up. It’s public property, it should not be sold to the mayors golfing buddy (or whatever the connection might be) at a firesale in the backroom.
3/7 city council members were opposed to the deal.
@Skippy: My bad. I am Sorry if I was wrong about you.
While I think this deal smells of durian fruit it should be noted that Broadweave is paying retail and about 6 1/2% interest, hardly a fire sale and that’s part of the problem going forward. Combine that with all the ill will swirling around and those aren’t great terms. Considering the Mayor’s zeal to get away from the network (though they didn’t get too far) it seems he got the better of Broadweave. But still the public looses. I will distance myself from more dire predictions that this particular deal spells the end of muni wholesale FTTH as the Wasatch Front was never a proper proving ground anyway.
I came to this site looking for more information on the whole Broadweave, IProvo merger. I am sorry to say I did not find any concrete information. I read through your letter and followed all the links and am wondering where you are getting your information? Most of the links just went to other articles in your blog. Some of the stuff you said did not make sense. For example: How is Broadweave taking over Eagle Broadband bad? The way you put it, they bought a dilapidated network and are fixing it up. Why is that wrong? Do you also have a problem with people buying run down homes and fixing them up? Or restoring cars?
Another thing, It is true that “Replacing these highly-skilled employees will be very expensive and have a strong negative impact on network operations,” but how do you know that they will replace the skilled employees? In the same sentence you say “especially in Utah’s tight labor market.” Now please explain to me how creating jobs is bad for the labor market? I admire your passion but I don’t understand your execution.
I never said that the way they handled the sale was any bit ethical. I am sympathetic to Telcom, because that is my industry, but to favor Broadweave at this juncture is pushing it. They have a lot to accomplish in just a few weeks. That would be a huge undertaking for a large company, but you have two small companies trying to make it work. I agree that iProvo is public property, or at least was, our elected officials deemed it necessary to get rid of the network. I agree with FGF the Wasatch Front was not the right place to attempt this type of network, maybe Salt Lake City, but even they know better. Telecom is not the place for a government entity, let the private sector handle it.
Plober: Each of those links points to an article with the hard proof and/or further detail and explanation of the point being made. For instance, I show definitively that Broadweave’s claims about its business age have been falsified repeatedly by posting a link to their website with one date and a copy of their corporation filings with another date along with a recorded conversation of their CEO making yet another claim.
My problem with their acquisition of the Eagle assets in Houston is that they don’t have the money or expertise to have their fingers in that many pies. Buying a network that requires at least $3-4M in investments to even be operational while pursuing projects in at least 5 other states seems a bit ambitious for a company of under 1200 customers, doesn’t it? This says nothing of Broadweave’s near-zero experience delivering video.
Since Broadweave has almost no experience doing video and Veracity has no experience running a head-end, they need those NOC employees. If they lose them, it will be very hard to have an existing employee fill that position without the required experience. Given that tech jobs are plentiful and unemployed techs are in short supply, this seems to create a bit of a problem for them, doesn’t it? Out-of-state headhunting is costly and time-consuming.
Besides, what information did you want? I’ve laid out a pattern of Broadweave’s inability to tell the truth, serious doubts about their financial ability to do all that they’ve planned and their technical inexperience. If you want details on the terms of the sale, Provo has posted all of that on their website. I’m giving the story behind the story.
The sale of iProvo should have been handled better. It is public property and I agree with Sherri Everett, the public, and the city council didn’t have enough time to weigh all the information available. Steve Turley said it best, “Forever a cloud will hang over this sale.”
Jesse: Thank you for elaborating on your points. The main problem I had with the letter is I was unable to follow the flow or understand the direction. You brought out so much and only briefly mentioned your idea when you moved to your next point. It confused me.
I do agree that Broadweave can not get rid of NOC techs with out creating a lot of work for themselves. They would just be shooting themselves in the foot if they got rid of the people who knew how the network was set up.
“tech jobs are plentiful and unemployed techs are in short supply” Given, I have not been job hunting for a while but isn’t it the other way around?
Plober: The company I work for has had a hard time filling positions due to employee shortages. We’ve also lost more than a few employees to aggressive headhunters. My experience is that we’re really close to looking out-of-state for more gearheads. I can’t imagine other companies aren’t in a similar bind.
Jesse: Maybe you’re company needs to pay it’s employees better.
**Disclaimer: There is no way for me to know if this applies to your company, but I’ll go ahead and mention it anyways (doh!)**
It has been my experience that many Utah companies are used to getting experts at a dirt cheap price (Utah is a right-to-work state, meaning that laws tend to vastly favor employers and screw the employees). However, as the competition for skilled employees continues to heat up in this region, the mavens are finally able to leverage their expertise; I couldn’t be happier for them. I have known several technical experts who were/are horribly underpaid, so I say it’s about time that these companies that are too greedy to pay these experts competitively get what’s been coming for quite some time now.
Astroturfer Alert: Well said!!!!!!!!!! I think that statement should be applied to almost every employer in Utah.
Hey, interesting article and comments. I happened upon the site while trying to research some stuff about Nuvont. I’ve got such a bone to pick with that stupid company, and I don’t even personally have their service.
I’m out in Utah visiting my sister who happens to have Nuvont’s phone and internet bundle package which seems to work fine and all. However, my sister had told me before I came that she only had 5200mins/mo of long distance, so to be aware when calling out of state. I’m like, no problem, whatever. After awhile of being here though I started wondering if the minutes were being used if someone called here from out of state. I figure with most providers it charges the other person, not you. But just to make sure I go to Nuvont’s website to try and find some information.
Well there was no information on that, but I’m looking at their site and I notice that the only plans they offer ALL say they come with unlimited long distance. I’m thinking, what the hey, my sister must have a really old plan or something. I call up the customer service line, get some clueless guy who’d probably been working their 2 days.
My first question was to double check whether my sister had the 5200 minute plan or the unlimited plan. So I mention to this guy that my sister thought she had 5200 minutes a month, and he tells me what the website told me, all of their plans have unlimited long distance. So I’m like- does that mean my sister has unlimited long d or what? I give him the phone number, he’s looking up the information…he goes “It does look like she’s under the unlimited long distance plan” so at first I’m like oh okay right on, cool,etc. But I’m still wondering why she thought it was 5200 minutes, so I ask if she was just automatically upgraded or did Nuvont ever offer an only 5200/mo plan?
He puts me on hold to ask someone, and this is what he comes back with: “Oh okay, maam, thank you for holding, I’ve checked with my supervisor and it turns out 5200 mins is the long distance plan, we just figure no one will go over that.” WHAT THE FUCK. Complete and utter false advertisement. I’m not even good at math or anything, but in what world does unlimited=5200.
I was too worked up at the time but I meant to ask, and I’m still wondering, what would happen if a customer went over the 5200 mins? It’s not like they could rightfully charge anyone anything since they’re advertising it as unlimited, but then why say it’s 5200? I just don’t get it.
P.S. I realize this is tangential to the actual topic, so I apologize if it’s out of place here, I just needed to vent.